Apple reported its fiscal fourth quarter results on Monday, November 2, revealing a landscape of paradoxes: the company hit a record quarterly revenue of $114.5 billion — a 12% increase year over year — while simultaneously warning that memory costs will keep climbing and that it cannot predict when iPhone Duo supply will catch up with demand.
This was the first earnings report under CEO John Ternus, who took over from Tim Cook in September after 25 years leading the company. On the earnings call, Ternus described current memory pricing as "unprecedented" — not a PR buzzword, but the assessment of someone who spent decades in supply chain and recognizes when numbers break historical patterns.
Revenue beat estimates, but with asterisks
Revenue of $114.48 billion exceeded the Bloomberg consensus of $113.46 billion. Diluted EPS came in at $2.10 versus $2.00 expected. iPhone revenue was $57.58 billion (versus $56.48 billion estimated), Mac reached $10.79 billion (versus $9.69 billion), and services hit $31.57 billion. iPad, however, missed: $6.23 billion versus $6.7 billion estimated, a 10% decline year over year.
Greater China revenue also fell short of projections at $17.54 billion versus $18.75 billion estimated. Despite this, Ternus cited "strong" sales in the region and pointed to 28% year-over-year Mac revenue growth, fueled by Apple's largest education deal ever, which brought 170,000 MacBook Neos to teachers and students in the Philippines.
The memory ghost
The most concerning figure from the earnings is inventory. Apple entered the quarter with $14.54 billion in inventory — a 31.1% sequential jump from Q3 ($11.09 billion) and a 154.3% year-over-year increase from $5.72 billion. The bulk of this buildup is memory.
COO Sabih Khan, who oversees supply chain operations, confirmed during the call that manufacturing purchase obligations increased $33 billion between the June and September quarters. Apple is stockpiling memory at any cost, anticipating sustained price increases.
Ternus was explicit: beyond December, the company expects memory costs to "continue increasing." The gross margin guide for the December quarter is just 45% to 46%, down from the 47.9% recorded in the prior quarter and below the 47% consensus. Without the tariff refunds, which contributed about 1 percentage point to gross margin, the effective margin would have been even lower.
CFO Kevan Parekh explained that without tariff refunds, product gross margin would have declined 1 percentage point sequentially due to memory costs. Apple raised prices on Mac and iPad in late June and iPhone in September, but even this pricing action may not fully absorb the shock.
The P&D investment that won't stop growing
In another record, Apple spent $45.77 billion on research and development during fiscal 2026 — a 32% increase from $34.55 billion the prior year. Q4 alone accounted for $11.73 billion, virtually unchanged from the prior quarter (a mere $1 million increase), suggesting the cost of R&D acceleration has hit a new stable plateau.
Cook previously noted on calls that Apple's R&D was "accelerating much faster than the company" overall. The comparison with other tech giants is revealing: while Apple spends $45.77 billion annually on R&D, Microsoft reports $31.9 billion in quarterly capex and Meta raised its annual guidance to $130-145 billion. Apple is not the biggest spender on infrastructure, but it is the one accelerating the fastest.
Interestingly, Apple does not disclose how it divides its R&D budget among individual projects. Unlike Google or Meta, which break out AI and infrastructure spending, Apple keeps this information in private. But the investments are visible in products: Siri AI, iPhone Duo, HomeView, Apple Intelligence.
What to watch
What this Q4 reveals is a company at an inflection point. On one side, record revenues and an iPhone that remains the engine of the business. On the other, a supply chain under extreme stress, with memory costs that appear to have entered an ascending spiral, and a new CEO navigating his first quarter.
The fact that Apple hit record revenues despite supply chain constraints — iPad fell short, iPhone Duo didn't even appear in the numbers as it launched after the quarter closed — shows the ecosystem's resilience. But Ternus's message about memory being "unprecedented" is not optimistic: it is a warning that the numbers will not be what they were.
The question is whether tariff refunds, which contributed 1 percentage point to gross margin and $0.05 per share of EPS, are a one-time event or a signal that Apple found a way to mitigate part of its import costs — and whether that advantage can hold as memory prices keep climbing.
Sources: Apple Newsroom, TechCrunch, 9to5Mac
✓ Independent sources cross-checked and verified before publishing
